B2B Payments

Real-Time Payments Begin To Turn Heads In Commercial Payments

A new survey released from TD Bank suggests that real-time payments technology is beginning to capture the attention of the corporate payments world. The finding suggests a shift in the market, with corporates unsure or unconvinced of how faster payments capabilities might affect their operations.

While TD Bank’s research hints at a possible turning point, the survey combines the responses of both corporate payment customers and payment service providers; it does not differentiate between what corporates want with regard to faster payments, and what service providers believe their corporate customers want.

Still, the research suggests the commercial payments industry is certainly paying attention to real-time payments. The survey, conducted at the 2018 NACHA PAYMENTS Conference held in San Diego earlier this year, asked 390 industry professionals about their expectations from the payments industry.

Forty-two percent of respondents said the integration of real-time payments within online banking will be the innovation that has the greatest impact on the commercial payments sector in the next three to five years. That’s more than artificial intelligence and machine learning, which 20 percent of respondents expect to have the greatest positive impact on the sector.

Blockchain was cited by only 11 percent, while biometrics landed just 4 percent of respondents’ votes.

Regardless of which technological innovation will make the greatest change, TD Bank researchers noted that organizations are struggling to keep up. The greatest challenge exists within legacy infrastructure, as professionals acknowledge the need to upgrade their systems and back-office technologies to accommodate the technological upgrades headed their way.

“One of the largest impediments to today’s payments industry is that change is happening faster than organizations can realistically accommodate it,” said TD Bank Head of Corporate Products and Services Rick Burke in a statement. “Sending and receiving corporate payments is a complex process and one that is not yet as nimble as consumer payments.”

He added that the rising demand for corporate payments to match the experience and functionality of consumer payments will place greater pressure on service providers. According to Burke, this could be why the commercial payments sector has expressed an increased interest in faster payments.

“As more CFOs and treasurers use immediate payment schemes in their personal financial transactions, the demand for commercial availability will also rise, and financial institutions and businesses need to be prepared to accommodate that expectation,” he added.

More than one-third of respondents said corporations and smaller banks must update existing infrastructure to handle incoming technological innovation.

Corporates’ Other Needs

In addition to updated infrastructure and (possibly) faster payments capabilities, there are other financial services technologies that corporates have on their “wish lists.”

For instance, 74 percent of respondents said a corporate payer’s experience with their financial institution would improve if they had a mobile app that integrated with their business banking processes.

And as service providers upgrade their systems and adopt more sophisticated technologies for their corporate customers, businesses are increasingly demanding greater security, with 84 percent of payment professional respondents predicting payment fraud and cybersecurity to become a bigger threat in the next two years. TD Bank noted, however, that there was a 5 percent decline in this metric compared to its 2017 survey, which could signal rising confidence among corporate customers.

Researchers added that 9 percent of respondents believe cybersecurity software will be the technology that has the greatest impact on the corporate payments industry, “potentially indicating that payments professionals may finally be seeing some positive developments in the area of cybersecurity,” TD Bank concluded.

Just as noteworthy are TD Bank’s findings of what are not on corporates’ wish lists. The report revealed 64 percent of respondents don’t consider cryptocurrencies to be legitimate forms of digital payment, while only 4 percent say cryptocurrency controversy will be the largest challenge to payments innovation today.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our April 2019 Unattended Retail Report. 

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